Paying for Parental Leave with Future Social Security Benefits

Research Report

Paying for Parental Leave with Future Social Security Benefits

Abstract

A recent proposal would allow new parents to trade future Social Security benefits for a few months of paid leave. Projections from the Dynamic Simulation of Income Model (DYNASIM) show that providing a progressive, 12-week leave benefit averaging about half pay without raising taxes would require raising the Social Security full retirement age for leave program participants about 25 weeks. This increase would permanently reduce participants’ monthly Social Security retirement benefits about 3 percent. The proposed program would raise Social Security’s annual costs, net of benefit offsets, about 1 percent, worsening the program’s financing shortfall.

Cross-Center Initiative

Cross-Center Initiative: 
To reuse content from Urban Institute, visit copyright.com, search for the publications, choose from a list of licenses, and complete the transaction.